Working Mother: Top Tax Cutting Strategies

Why not get 2010's tax season started early today?

With the economic recession in full blast, and Christmas coming up in 6 months, (yes, start shopping NOW), you HAVE to start getting your finances in order. So how can you reduce your tax bill? Jerri Ledford, from Working Mom's Refuge tells you how:

10 Tax Cutting Strategies You Can't Afford to Miss
by Jerri L. Ledford
The days are getting cooler and shorter. Christmas is just around the corner. Unfortunately, so is the tax season.
As difficult as it is to believe, right now is when you should be planning for the tax season. After all, there are only a little more than three months before the end of the year. And once December 31st has come and gone, the only strategy you have is to pay Uncle Sam on time.
Naturally, none of us want to pay more taxes than we have to. So here are 10 strategies to help you reduce your tax bill.
Invest in series EE savings bonds or certificates of deposit (CDs) that mature in six months. These investments allow you to defer the taxes on interest paid until next year. But in the case of the CDs be sure the interest will not be credited to your account or made available to you until January 2001 or later.
If your company pays bonuses at the end of the year, try to have those bonuses paid in January rather than in December. Also, ask about having your employer pay for college tuition or offer another type of benefit rather than paying you directly.
Max out retirement investments, especially 401(k) plans. Most 401 (k) contributions are made pre-tax. Use this your advantage to reduce your taxable income.
Recognize any capital losses experience in conjunction with the recent stock market swings. You can take up to $3000 of capital losses per year, anything above that amount can be carried forward to next year. Also keep in mind that if you have a stock that is down now, but you expect the price to rise in the future, you can sell the stock, take the loss now, and then buy the stock back later. However, note that you must wait at least 30 days before buying the stock back or the capital loss is disallowed.
Pay your January mortgage payment before December 31st. Since the interest paid on a mortgage is tax deductible, and since the interest included with your January payment is usually for the month of December, paying the payment before the end of the month makes the interest allowable. The catch is, it probably won't be reflected on the interest statement that you receive from the mortgage holder so you'll have to figure that interest into the total yourself.
Shift consumer debt such as credit cards, personal loans, and automobile loans to a mortgage loan. The interest from qualifying mortgage loans is tax deductible.
Don't buy mutual funds at the end of the year. Fund companies usually distribute dividends and capital gains at the end of the year, meaning that if you buy a mutual fund in the last quarter, you have to pay the taxes, but you don't gain any benefits.
Tally up all of your medical expenses — doctor's bills, prescriptions, orthodontic work, eyeglasses, contact lenses, health insurance premiums, transportation for medical emergencies, orthopedic shoes, and hearing aids are among the deductible expenses. Medical expenses are only deductible if they surpass 7.5 percent of your adjusted gross income. But if you're close, you might consider paying off outstanding medical bills to push your total over the line.
Deduct jury pay. If you received pay for jury duty during the year and turned it over to your employee in return for your regular salary, you can deduct the amount of the jury pay, even if you don't itemize your return.
Make donations to charities. All charitable contributions are tax deductible, including appreciated securities that you've held for more than 12 months. If you do donate appreciated securities, you gain two ways. You avoid capital gains taxes and you can deduct the fully appreciated market value of the stock. Also don't forget to get receipts for donated goods or cash donations.
No one likes to pay taxes. It's an unfortunate part of being a working adult. However, if you begin to plan now for the taxes that will be due at the end of the year, you'll be able to take a sizable chunk out of the total amount. Defer income where possible, accelerate expenses when doing so will give you tax breaks, and don't forget to take the tax credits that are due to you.
Who knows? With the money that you save, when it warms up again you might be able to take that vacation that you've been putting off.
Jerri Ledford is a freelance writer and small-business expert for the Visa/First USA Bank eBizCenter. She also is an instructor for the Writer's Village University (http://www.writersvillage.com) and the Co-Owner/Co-Moderator of the Momwriters Web site (http://www.momwriters.com) and LISTSERV. You can e-mail her at JerriLedford@cs.com.

Resource: http://www.momsrefuge.com/career/0009/ledford/index.html